Global Regime Uncertainty

Dr. Brendan Brown, Head of Economic Research at Mitsubishi UFJ Securities International (London), recently cited Senior Fellow Robert Higgs‘s work on regime uncertainty—both as the cause of the prolongation of the Great Depression as well as today’s economic malaise—suggesting that his premise could well be expanded to explain today’s global economy.

In his Economic Viewpoint, “Global Economy in the Grip of Regime Uncertainty,” Dr. Brown suggests:

Should regime uncertainty in the period of the Great Duration not have embraced the monetary order (Roosevelt’s massive devaluation of the dollar, his ending of the gold standard in the US, the generation of huge uncertainty about future monetary stability, stark questions about the monetary future in Europe, and perhaps most of all the future of peace with war clouds gathering from the mid-1930s onwards?

In this broader concept there can be no doubt that today’s global economy, not just the US, is in the grip of regime uncertainty.

Dr. Brown then traces the sources of today’s uncertainty, concluding:

There is little prospect of regime uncertainty diminishing this Autumn. It is much more likely to increase.

Unfortunately, until Washington (and, Dr. Brown argues, Strasbourg—the seat of the EU), changes its way, we fear he is correct.

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